Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
For investors who had expected a positive end to a solid 2013, the stock market hasn't delivered on the promise of its first 11 months of the year. Today, the Dow Jones Industrials (^DJI 0.26%) dropped for the third day in a row, with a 94-point decline showing the extent to which investors are nervous about hanging onto their hard-earned gains of more than 20% on the year. More than twice as many stocks fell as rose, with DuPont and Pfizer (PFE 1.04%) leading the losing contingent. But ExxonMobil (XOM +1.69%) posted the best performance of the day, while Verizon also climbed even as AT&T (T +1.21%) fell on industry-related news.
Pfizer fell almost 2% after incurring the wrath of analysts at Goldman Sachs, which took the drugmaker off its Conviction Buy list in favor of pharma rival AbbVie (ABBV 2.52%). Although the accompanying report praised Pfizer's long-term prospects, it argued that AbbVie has more room to run higher, especially as it makes moves to find alternative sources of revenue to its blockbuster Humira. Goldman now expects Pfizer to continue following in AbbVie's footsteps with a more dramatic restructuring and separation of its business within the next several years. But Goldman likes to be ahead of the crowd, and finding itself among a large group of like-minded investors likely led it to make the switch.
ExxonMobil rose just a bit less than 1%. The oil giant has gotten a lot of attention lately because of Warren Buffett's decision to buy the company's stock. Yet looking at its fundamentals, widening spreads on the oil market point to what could be a strong quarter for Exxon's refinery operations. Combined with a $3 jump in the price of crude today, that could produce impressive results for Exxon this quarter and beyond.
On the telecom front, Verizon climbed 0.7% while AT&T fell 0.2% as investors started to get a better handle on how the Federal Communications Commission is likely to regulate the industry. With new FCC Chair Tom Wheeler giving a speech yesterday, it now looks like the FCC will likely give smaller players more access to government spectrum auctions, potentially hurting AT&T's and Verizon's growth prospects. Yet other areas might work out well for the telecoms, such as support for the ability of charging higher prices for heavy broadband use. With the industry evolving so quickly, regulators will struggle to keep up, and that will prevent investors ever from getting complete certainty about the competitive environment that AT&T and Verizon will face in the future.
